Which day should you \’sell and go away\’?

Investment strategies Ed Yardeni considers the difficulties of riding rambunctious bull markets in a note Thursday and concludes that timing the \”sell in May and go away\” idea is tough because it\’s not always May when the correction begins, and the corrections can last anywhere from two to six months.

As he puts it: \”The trick to riding bulls is to stay on and avoid getting thrown off because it can be tricky trying to get back on.\”

Yardeni notes that while the current bull market in the S&P 500
from 2009 to the present tracks the same course as the 2003-2007 bull, it has been more volatile, adding:

\”Over the past three years, there were three corrections. In 2010, you had to know to sell on April 23 and buy back on July 2 to avoid a 16.0% drop in the S&P 500. In 2011, if you sold on April 29 and bought back on October 3, you dodged a wicked 19.4% correction. Last year, the day to sell was April 2, and the day to buy back was June 1, thus avoiding a 9.9% decline in the market.\”

Looking for buying opportunities is also a challenge, Yardeni notes, saying:

\”I’ve run into lots of institutional investors who were hoping for a buying opportunity as a result of the fiscal cliff. If you blinked, you missed it late last year, when the S&P 500 declined 7.7% from September 14 through November 15. Since then, it is up 14.9%. \”

He adds that:

\”Now that the S&P 500 is only 0.7% below the previous bull market’s record high, should investors be worried that history is about to repeat itself? I don’t think so, but it is a bit worrisome that no one seems to be worried.\”

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